A 2-For-1 Share Split

question 50

Multiple Choice

A 2-for-1 share split:

• A) Is accounted for in the same way as a 100% stock dividend.
• B) Increases the number of outstanding ordinary shares, but par value per share remains the same as before the split.
• C) Is recorded by transferring the par value of additional shares from retained earnings to the ordinary share account.
• D) Should logically cause the market price per share to drop by approximately 50%.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are accessible to all without diminishing availability to others, such as public parks or national defense.

Ability-To-Pay Philosophy

A principle that asserts taxes should be levied based on an individual's or entity's capacity to pay, implying those with higher income or wealth should pay more in taxes.

Progressive Income Tax

A tax system in which the tax rate increases as the taxable income increases, imposing higher rates on those with higher incomes.

Taxation

The process by which a government levy charges on citizens or corporate entities to finance government spending and activities.